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tv   FOX Business After the Bell  FOX Business  October 26, 2012 4:00pm-5:00pm EDT

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honest number. dave: you can make some money on it as well. connell: liz: we are flat on the session but dow jones industrials trying to eke out a gain. the russell 2,000 solidly in the red for much of the session and couldn't make a go of it. dave: a clear mixed decision. financials where a real drag on the markets. commercial banks reflecting concerns about business spending and economic growth. p and c, fifth third and regions, all of them falling. liz: goodyear tire driving the wrong direction after a steep drop-off in european sales. income 32% in the third quarter and the company is warning of additional cuts coming because of economic uncertainty. stock down 10% and the ceo saying we don't see a turnaround at least for the moment in our
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european business. tire sales don't look like they will pop up anytime soon. dave: sometimes a few big moving stocks can affect the market. these ones were the drag in the dow, not all of the down today, but dupont, boeing, travelers and chevron all pulling down the dow big-time this week. if it wasn't for them we would have pretty much a better market but these are the big dow losers. liz: what about inflation? the fed set aside from a little inflation uptick for gasoline prices they didn't see it long term many times in but we have a money manager who says don't wait for anybody to call it. make sure your portfolio is protected. michael wall, three ways to play information. dave: some say this form will be the worst in a hundred years, who knows, but there's a serious question. will hurricane sandy become the
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perfect storm? another storm moving from the west, coming from the north as well. we have details on the megastorm's hat and potential billion dollar impact. liz: a mixed day on wall street with the s&p 500 landing in the red. the dow and nasdaq were able to climb into the green with the nasdaq rallying back after trading below its 200 day moving average for the first time in five months but despite modest gains with a down week on wall street all ten s&p 500 sectors end lower. materials and energy leading the decline but at one point the dow jones industrials were down 63 points. not as bad as it could have been. consumer confidence soaring to a five year high in october as consumer sentiment index climbed to 82.6 rising five.5 points from last month and a surprise to the upside with u.s. gross
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domestic product rising 2% accelerating from the second quarter, 1.3%. consumer spending which was the biggest impact on gdp is 70% of all spending increase 2% from 1.5% in the third quarter and government spending jumping 3.7%. dave: we have kevin grady in the pits of the cme and peter kenny, limited potential for stocks. just hold on to this year's gains. mike gibbs on the other hand doesn't see the downside risk and he is bullish on stocks. i want to start with kevin. we have this gdp move. it is up a little more than expected but it is -- a lot of it is government spending. as far as business spending and exports they are down. is that why the market was having trouble finding footing today? >> i think it is. you have to look at the internals of the report.
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2 presented a good feel good number but when you dig into what drove that 2% was government spending and consumer spending. with an economy that appears to be flat on its back and cannot gain any momentum to the upside how much longer can consumers spend that way? we are heading 40 fiscal cliff. how much more can the government go, how much more can we spend? that is why you are seeing in the trade today mixed market continuing up and down. can't find that momentum to break through on the upside to make new highs. liz: we can spin it forward fbn bob's bob and we get the jobs number soon and people will be looking for that final jobs report before the election. how much power does that hold? >> holds a lot of power. that is something the market really is going to focus on next week. you need a big upward surprise in jobs next week to really have the market gained momentum and i
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think make people feel like there is momentum in the economy. even if the number comes in lackluster ahead of a presidential election that carries a lot of weight on which direction the market will move particularly as we move post presidential election. dave: what is happening with commodities? we have seen gold test the 1700 mark. it out but did not go anywhere today. >> when you look at commodities, gold in particular it is a two day trade. you mentioned inflation and people are looking at that. we don't see a lot of inflation right now and people looking for the momentum side in the economy and it is not there so you are seeing some pull back in the gold trade. looks like a more bearish trend on the chart as people are selling into that and so much uncertainty out there right now as we do move through the end of the year. let's go further than earnings with new executives on the conference calls, a lot of uncertainty and what the fourth quarter will be like and what it
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may be like going into the new year especially with a new administration coming in. dave: a lot of things could happen. we will come back to you when s&p futures closed. liz: investors expect stocks to rise in the week ahead? time for a street fight? dave: night capital managing director peter kenny, raymond james, cote head of equity trading, michael gibbs. you are the bull but you have concerns about earnings particularly with regard to revenue. revenue does seem to be slowing. that is a concern. >> revenue is 42%. long-term average is 62%. we have challenges with earnings and revenue and uncertainty over the fiscal cliff, the election, etc. but the market price now in the situation where we have limited downside, what are we going to put on the market? 13-13?
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that is where we bottom in 2010 when we thought europe might collapse. you have a market that is still in the mid 1300s which is not too far from here on the downside and if we get some resolution on the fiscal cliff which i think we will. the fiscal clinic next year the number and% drag with 2% gdp growth. a multiple on the upside and menacing the above 1500 so the risk reward looks compelling to me. liz: michael just outlined some positive or at least don't be a fraidy-cat scenario. what do you see that keeps you so concerned keeping in mind the past nine month anybody who was worried lost out on this rally. >> the index put in a very good year. the s&p 500, nasdaq, dow, a positive, 14%, 12%, great performance year to date. the last few weeks gave us a bit of a pull back and that came from what should fundamentally
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drive the market and that is earning less. more specifically revenues. revenues in the broader narrative very much of a disappointment. you point out good year earlier. great example of a multinational that is speaking as a result of the e.u.. the e.u. is a head wind, very much real, it hasn't gone away. it could get worse. fiscal cliff, we see clarity and resolve -- liz: what do you say about expedia which is solely based on discretionary income and how much they spend on travel when going to the island or wherever they choose to go? they did beautifully. >> that speaks to consumer confidence and you always have pockets of strength regardless how weak the overall market is. i am not saying we are falling off a cliff. i am saying guidance forward for earnings is anemic. there's a lot in a way of head
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wind and i am not sure there's a lot of room on the upside. dave: a bullish visible bearish and the bear that is a little bullish. let's focus on a sector taking a lot of focus which is technology. we have a major shift going on, what apple is trying to do, some people say for the first time they are following rather than leading technology in their habits. other people look at what microsoft, walt mossburg had this terrific review of surface, their new tablet in which he says it is a real game changer so you have microsoft, the software company getting in successfully to hardware. we are in one of these major shift happening in technology. how is it going to shake out? >> it is a big deal. look what technology is doing and driving and that continues to play out. you have the shift that is going
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on. it bodes well for the technology space especially companies that are supplying bigger companies producing products and if you look at the tech space in general you have record cash on the balance sheet generating a ton of cash flow and willing to share that in the form of stock buybacks and dividend increases so that puts that sector in a very opportunistic place. [talking over each other] dave: you don't like to be specific but if i had cash i wonder how this major shift in technology will play out. where would i put my money? more on companies that focus hardware or the ones that focus on software? >> software is better. you have got to be a little more specific to the areas of a market that are involved. companies that are supplying the equipment that goes into the tablets and smart phone, if you look at -- an investor does is look at the earnings report you
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can see companies that surprised or gave better guidance than their peers or the ones focused on that area and that is where we would be looking. liz: the names you really like right now? >> i love the consumer staples because the dividend, the predictability of performance because the demographic trends the sector can build on. i love large cap for well over a year-and-a-half. to your question earlier about hardware, software, look for a company that can do both, migrating culture toward strength and which has a dominant position in one of the other -- dave: you are talking microsoft. neither of you want to focus on particular stocks but that is what microsoft is doing. >> interesting story. dave: a lot of people doing different things and some are succeeding and some are not. michael gibbs, good to see you,
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coming up next we are tracking hurricanes sandy as it makes its way up the east coast. where it could, we emphasize could, team up with another storm coming from the west with devastating results in heavily populated northeast. live report from the weather center next. liz: ready to play the inflation game? we are. michael walsh, ceo of wall financial will share his winning plays he believe can be you down a road to profitability. dave: better than blackjack a. overstock ending the week with a huge move to the upside. look at the pop in the last two days. 30% coming. after burns joining us exclusively to talk about rising revenue, attracting consumers in a crowded field, what is going to happen after the election? a slew of stuff to talk about with patrick coming up. [ male announcer ] this is steve.
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dave: s&p futures closing right now. let's go to kevin in the pits of the cme. how is it shaping up for monday morning? >> we will end where we finished, and though mixed on the day as we head into the weekend and come into monday morning we will look what happened with the gdp data today and looking at the reports next week, manufacturing data and unemployment report at the end of the week. dave: have a good weekend. liz: people are prepping for hurricane sandy which is being called a 50 year storm. they might be disappointed to learn they might not be able to stream movies. let's go back to nicole petallides on the floor of the stock exchange. nicole: making a little money, it is pouring and you want to be home and watch your netflix, turns out you may or may not be able to do so because we talk
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about hurricane sandy's have going from florida to maine but in that same path is a key data center, critical data center in north virginia. in the past has been hit by lightning and was offline for a while and powers and move those websites and also included in that would be netflix. we are not saying you won't get your netflix but it was coming out that that is something among the websites and services and things we will be watching. netflix had a great day of 10%, but that will be one of many things we are watching next week. dave: one thing everyone will be watching is the storm. the east coast is keeping a watchful eye on the potential devastating superform of hurricane sandy collided with an incoming snow storm that is coming from the west. could be a monster. liz: a number of forecasters say
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sandy could make a beeline for the northeastern u.s. early next week. let's go to rick for the latest details. where is it now and what are the chances it smacks into new york city? >> it won't matter if you can get netflix because people won't have power. it really doesn't matter and a lot of people might that have power for a week or two. with that kind of power outage, in to many millions, takes a long time to get back out there for everybody. here you go. the storm is across parts of the bahamas and it doesn't matter and we have rain across florida and the carolinas and rain at times, wind still 40 to 50 miles an hour at times. once we get to the northeast we get a significant problem on our hands. the european model we have been watching closely and it is shifting farther north, the center of the storm came on
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shore around central jersey at 6:00 tuesday, that side of the storm is towards new york harbor. a lot of water toward long island sound and water piling into new york harbor, major problems for new york city. long island, major problems, north jersey major problems but the way the topography of the coast line is, all the water comes in and can't get out and that is one of the problems. the other model we like has been trending farther north and it is around their wards road island. that puts more energy plus coastal areas of maine. it won't necessarily be one of those. could be somewhere in the middle or that general area. it doesn't really matter because by the form -- by the time the storm gets to the northeast is not a potential hurricane with the strongest wind at the center of the storm. is a difference to amend wind field will be huge. many people will be dealing with a lot of wind and a lot of power outages. one thing that will definitely
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happen wherever you have the storm to the east or to the right there will be a lot of storm surge, significant storm surge and waves that will cause significant damage to the beaches of jersey, long island, connecticut, cape cod and the island's. a two day event with possibly hurricane force winds, long duration rain and wind and power outages are going to be a significant problem for people not just on the coast but well inland as well. dave: next week we have a full moon that will drive up the tied even more. >> and you get this on top of it, that adds insult to injury. dave: good to see you. thank you, appreciate it. playing the inflation game to your dad did. michael walsh shares his three winning plays to keep you ahead of the house. it's a new day.
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liz: the fed plans to keep interest rates low through mid 2015 and the fed isn't worried about inflation over the long run. a little worry about short-term gasoline prices but long-term not really but we have a money manager who says the risk of inflation is, quote, huge. he has three ways you can play it. michael wall is the ceo who joins us in a fox business exclusive. we will play the inflation card
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game but before we do let me play devil's advocate. warren buffett year-and-a-half ago wrote a column saying inflation has to be coming because with all the stimulus and money put into the system at some point it will happen. he just didn't know when. we haven't seen it meaningfully happen and wages have kept pace with everything going on. what back on the calendar are we talking about? >> good to see you. i don't know there is of particular point you can play for but it is definitely going to happen. what is inflation? the cost of things getting greater. as with look over time you mentioned gas and oil, we definitely have seen that happen and we will see that as you mentioned about printing money. there has never been a time we haven't printed money in the past where inflation didn't follow so preparing for earlier is a good bet. liz: let's talk about how to
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play this. there are three cards that give people a winning hand. the first is three specific ways to invest to prepare for what you believe is inflation coming. >> i like the actual idea of physical metal, gold, silver. everybody needs medical but silver, gold, medical -- metals, silver, like anything else anytime more dollars are printed a fear goes up and costs and value of the dollar goes down. gold and silver have been around for ages and they will always be around. i like the idea that physical metal -- >> i like buying it in claims. the reason i like that is play a real situation where america doesn't have the great future we think, it will. at least those coins can be used
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in addition. they have value that can be used as legal tender. liz: now you sound like my dad. when the nazis come marching on sunset boulevard in won't take dollar bills. is that a dramatic scenario? >> it can be bought at the end of the day i don't think it hurts to have some in any phase of the game. we are not talking about selling the house, sell the car or sell everything. just a little piece. liz: you say real-estate. >> particularly physical real-estate. in florida right now in this market, not just here but other countries in the world we have seen costs, values of homes, over the years and now is a great time to buy and what is important is when you look at the real-estate you own, there is greater demand for renting.
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it is harder and harder to get a loan and all that goes with it. that is a great play. look at your personal money and said i might buy a piece of real estate hoping the value of the real-estate will go up and you have the ability to have -- we're seeing in this market a lot of people on season, $15,000 a month on property and some times law math and work. liz: your third car as we reveal it is something that involves managed futures. you call this -- >> it is actually something that -- the neat thing about this is you can buy it through security benefits. it is in the structure of an annuity but it is a managed futures index, investing in a variety of things. if you actually look if you were
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to own this, in the last ten years it would average 4%. the best ten years, a little over 8.5% and there is zero risks to your principles of for a piece of the situation that might be something to look at as far as diversity and have some way for the future. liz: thank you. we will put these ideas on our facebook page for "after the bell" but thank you so much. how many freezers do you have? do you have two frasers and a bomb shelter? >> i've three freezers because i have four kids. they eat a lot of food. don't buy real estate in a hurricane. liz: good to see you. thank you. over to you. dave: you still have your gold coins. liz: all five of them.
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dave: the biggest case to big banks. former white house counsel steve gray joining us exclusively telling us why he filed a lawsuit challenging parts of dodd-frank on behalf of the smaller banks coming up.
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liz: time for a quick speed read. some of the day's other top head lines, five stories one minute of the first up, will mart plans to open 100 additional stores and create 18,000 jobs in china by 2013. they currently have 370 stores in the country. mcdonald's will sell bags of its ground coffee in canada last month. roughly 12 ounce bags will cost 7 canadian dollars which is just over 7 u.s. dollars. no word whether sales will come here soon. national association of manufacturers estimating six million jobs will be lost in the u.s. falls off that
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fiscal cliff. the organization warns that the looming spending cuts and tax hikes could remove $500 billion from the economy. the white version of apple's ipad membership any selling out within 20 minutes of being made available for preorder. the device is scheduled to hit stores a week from today. this breaks my heart, it does. nhl canceling the entire schedule of november because there is no agreement tweem the players and owners. this brings the end to roughly a quarter of season. this is today's speed read [buzzer] david: you did it. liz: what are they thinking? what are they thinking? david: we'll ask mr. bettman and find out. liz: we love gary bettman to come in. during the first presidential debate mitt romney pointed out problems he had with dodd-frank regulation. >> one is it designates a number of banks too big to fail and they're effectively guaranteed by the government. this is the biggest kiss
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given to new york banks i have ever seen. liz: we have somebody who agrees with romney that dodd-frank is a gift to big banks earnings the big is he called it. we have boyden gray, former white house counsel and former ambassador to the european union. he is representing a texas community bank that is challenging dodd-frank in u.s. district court. ambassador gray, thanks for coming in. be as specific as you can sir. in what ways does dodd-frank favor bigger banks over smaller ones? >> in a couple of major ways. the dodd-frank act contains massive new regulations which typically in industry but especially here much easier for big banks with big overhead, big lawyers, big lobbyists to take care of. if you're like our client a little bank in springs texas, with 40 employees it makes it difficult to carry certain lines of business where there is big, big risk
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impose by this regulation. that is one of the big problems. the other is the fact that allowing the government to designate certain banks as systematically important because it gives them a funding advantage because it is implied bailout. gives them funding advantage. typically big institutions. little community banks like we represent don't get that kind of favoritism. this is another competitive disadvantage with the bank that may be just down the street. liz: what is at the heart of your lawsuit here? in essence it is unfair because of onerous regulations, there are thousands of questions and subquestions, each bank no matter what side has to deal with. the therefore it is the little guys who can't afford to keep up the pace with this and may very well pick winners and making it so difficult for the little ones? >> well, that's the underlying reality. the reason we filed the lawsuit is because more constitutional in its nature. that is to say, there is no oversight of this system
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which is tilted in favor of the big guys. there is no, there is no political oversight. the courts are basically cut out. the congress has no say. the white house is prohibited about providing oversight. even the federal reserve board which houses an pays for one of the agencies we're suing here, it is prohibited from intervening in any way to try to correct an imbalance. we're talking about a structural, constitutional problem where the public has no guarantee at all of the separation of powers which is so much a part of our constitution. david: ambassador, i think the thing that bothered people the most out of the bailouts, most of which have been paid back but the thing that bothered them most is when the big financial institutions, not the small commercial banks, but where they got bailed out by, by the taxpayer for their risky bets. does dodd-frank make those kind of bailouts? bailing out risky bets easier or harder for these
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big financials institutions to do? >> it, i'm not sure it makes it any easier than it was before but helps institutionalize what was possible before so it could happen again. it did not end the problem which is one of the so-called promises for the statute to end the problem t perpetuates it and makes it worse. liz: what must you think when you see mitt romney has been recipient way more wall street money and that includes some of the biggest financial houses? he talked very tough, dodd-frank gave them a big kiss. so he makes it sounds like he would be a lot tougher on the banks but the banks are behaving because they could get some sort of deal from him because they are donating money to him? >> i don't think governor romney will give them any good deal if he is elected president but at the same time i also don't think he will demonize them. even what he said last week or 10 days ago was not the kind of rhetoric which think
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has been so unhelpful prothe current white house. david: ambassador boyden gray, thanks very much for coming on. please come back and see us again. >> my pleasure. liz: hurricane sandy, we're all over the story. it is heading right towards the northeast where it could meet up with a friend, creating the type of super storm we haven't seen in 100 years. the costs could be more than just a little halloween square. we're going to take a look at the economic impact. that is next. david: you could go on overstock and buy some rain boots and umbrellas. the online retailer's stock soaring the last two days, over 30% after profit reporting a rise in profit and revenue. coming up next ceo and chairman of overstock, patrick byrne, you seen him before you know he is always fun, he joins us,clusion live -- exclusively to find out how the company is gaining strength and providing to consumers these days.
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>> i'm robert gray with your fox business brief. it was a mixed market down on wall street. as the closing bell stocks spent the day between gains and losses. citigroup fired internet analyst mark mahaney over the facebook ipo fallout. citi told fox business that mahaney failed to stop the release of confidential information about facebook before that company's initial public offering. citigroup was hit with a $2 million fine from the state of massachusetts for the disclosure of that information. and online businessman paul siglia has been charged with a multibillion-dollar scheme when he filed a federal lawsuit falsely claiming he was promised a $50 million share of facebook. the u.s. attorney's office said he forged and destroyed evidence in support of his claim. that's the latest from the
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fox business, giving you the power to prosper
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david: it's market cap is small but overstock.com stock has been moving big-time recently and caught the attention of investors. the stock is up over 30%, just two day, following a glowing quarterly report. visitors to the overstock's website, they're buying more and revenue increased and market share broadened as the smile on the face of the ceo patrick byrne who joins us in a fox business exclusive. good to see you again. look at that smile. you're a happy man. 30% rise in stock is it not bad. is all this increase of overstock the something you're doing or the overall economy getting better? >> it is a result of some things my colleagues are doing. i'm just along for the ride. i have got 1200 fantastic colleagues. their cylinders are all firing and so they're doing
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great. now the economy i think is, i've got the same opinion i've had for three years or longer but i have got 1200 colleagues who are knocking it out of the park and consumers are reacting. david: one thing overstock is doing, again you can put it all on your colleagues which is very kind but i'm sure you have something to do with it you at least approve it, your operating expenses are down by a couple million dollars. how have you done that? >> we just tightened our belt. we're very cost-conscious. we squeeze pennies and our whole schtick is, that we're shaving every penny and dime we can out of our cost structure and then we pass the savings onto the consumers. as a result we've got, we really are the lowest price, in general, people recognize we're the lowest price online. we're cheaper than amazon. we're cheaper than all our competitors in general on hundreds of thousands of products. everywhere i go in this country i meet fanatics for
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overstock it is so nice. people tell me how much they're buying for us and redo their living room and all that stuff. so that's how my colleagues are contributing. david: i'm wondering if you're being forced to lay people off in order to save money? >> no. it's really, it's not that. it is working smarter. getting people to work smarter. finding efficiencies. that is the thing about capitalism. when you have a bottom line you're always trying to find ways to do more with less. it is not about laying people off. not at all. if anything we invest, we invest millions of dollars in educating and retaining and making our employees happy. david: now the overall economy, you are really in a good position to judge how it is doing. where do you think it is going right now? >> oh, well, i mentioned several times or for many years i'm a bear. my analogy, my metaphor is, imagine you go to a dentist and you've got a toothache, i got a toothache and fills
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you with novocaine and you said no, no, i need a root canal and gives you more novocaine. i need my tooth pulled and dentist gives you novocaine. that is what the u.s. is doing fiscal irresponsibility and deficit spending. it didn't start with president obama but started well before him. all we have now are politicians promising bigger and bigger doses of novocaine, not doing the tough dental work. david: does it matter to you in terms of your gameplan, your business plan, who wins the election? that is will you have the same business plan no matter who wins? >> well as i think i've indicated before i always felt a little conflicted about criticizing this president. i like the fellow and such. and, it won't matter, depending on who wins it is not going to matter to me who wins. but, i think that we're coming up in january, some
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real decision points. and based on, it is not just the president, it is congress. based on decisions they make we'll be making decision about how aggressive to be or whether it is time to batten down the hatches and just be risk-averse. so we will be watching the decisions made in d.c. in the next couple months. that will affect our business strategy. david: patrick byrne, continued success, patrick, we really appreciate you coming on and we're happy about your success. >> thank you for having me. david: patrick byrne from overstock.com, the founder. liz? liz: i like his dental analogy. hurricane sandy traveling down a destructive path, actually traveling up toward the northeast where it could team up with another storm. this super storm could have a super economic impact when it hits its highly populated target. up next a look at billions of dollars the would wash away. ♪ jack, you're a little boring.
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david: east coast bracing for billion dollar super storm as hurricane sandy makes her way north. liz: as we've seen in the past for devastating storms
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like katrina and irene many did not see the extent of the damage coming. adam shapiro is doing looking for us. it will be flooding. that is what noaa is most concerned about. at 3:00 p.m. update they talked about the full moon and full moon cycles will create higher storm surge. what they can't say what part of the east coast will face the worst part of that storm surge. right now they are saying there is 90% certainty that the storm is doing, hurricane sandy right now, by the time it hits the united states or tropical storm or cyclone sandy, 90% certainty it will hit the united states monday night. once it hits and rain and rain and rain. according to noaa it will be a two or three day event tore most people, bringing in west virginia up to two feet of snow because it will impact with the other storm systemming coming out of the west. it is a cold front, when the cold front hits, snow in west virginia, snow in pennsylvania, snow in ohio.
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up to eight inches in pennsylvania and ohio. analysis from noaa, says roughly 10 inches of rain. hurricane irene dumped a lot of water on new jersey, vermont, new hampshire. there is severe flooding. that is what they expect this time around. fema is on the call. they are moving emergency response people into position in the atlantic states but until they know where the storm will make landfall they don't want to pin anyone down. back to you liz. david: liz has a house on hudson river and i have one on cape cod. >> can join me. david: i think we'll all be camping there. a homeless man spent two decades staying in hotel rooms and visiting disney 26 times, not legal of course. find out how he did it and if you want to break the law how he could do it. liz: what you need to make it big next week.
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find out here next on fox business. ♪
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desk." wait until you hear this story. homeless man confessing to staying in hotels past two decades by memorizing other people's credit card numbers. try to do that. 49-year-old jeffrey hawkins was you busted at disney world in florida where he told police he was tired of running. he lived 20 years on stolen credit cards. he apparently liked disney, visited 26 times, racking up $18,000 in credit card fraud. i guess it is the happiest place on earth even for homeless thieves. melissa: not anymore. east coast residents preparing for its expected landfall earlier in the week. a number about weather analysts are say the super storm could be devastate -- devastating and historic. disaster experts say the damages from sandy would could be more than hurricane irene which was huge. david: we're focus on the

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